BlackSand's first buy confirms strategy

The acquisition of the Pearlridge Uptown II shopping mall marks the first purchase for a real estate investment firm formed by the scions of two prominent Hawaii real estate families.

BlackSand Capital LLC said Friday that it has purchased Pearlridge Uptown II — which includes the former J.C. Penney building at Pearlridge plus the standalone building that used to house INspiration Interiors for Home and Office — from INspiration International. Mark Bratton of Colliers Monroe Friedlander represented the seller.

Bert A. “BJ” Kobayashi Jr. and Ian MacNaughton partnered to launch BlackSand Capital LLC last spring with help from an advisory board whose members included their fathers, Bert A. Kobayashi Sr. and Duncan MacNaughton. They also left their positions at the family firms, the Kobayashi Group and The MacNaughton Group, which occupy adjacent space on the second floor of the Hokua condominium they developed. BlackSand is based in a separate office down the hall.

Kobayashi and MacNaughton declined to disclose the purchase price of Pearlridge Uptown II, nor would they comment on the amount their investment fund has raised to date.

The BlackSand fund is sector-blind in its investment strategy — the only mandate is investing in Hawaii, they say.

Even leasehold properties — the Pearlridge Uptown II property has a long-term ground lease with landlord Kamehameha Schools — are being considered.

“Obviously, there’s a lot of leasehold properties that are attractive here in Hawaii,” Kobayashi told PBN. “A lot of what we’re looking at are properties that have some inherent challenges to work out.

And investing in leasehold gives the local firm an advantage,

“A lot of Mainland investors will not purchase leasehold real estate, so the competition is reduced, which we find attractive,” MacNaughton said.

BlackSand plans to improve any assets it purchases, and reposition them, Kobayashi said.

That includes the Pearlridge property, which is also unique because it is attached to a larger enclosed mall that is owned by a partnership between Glimcher Realty Trust and Blackstone Group, which paid $245 million for the rest of Pearlridge Center last year.

BlackSand has hired MMI Realty Services, the mall’s former management company, to manage its portion of the mall, which is anchored by Price Busters on the ground floor and Borders on the second floor, according to BlackSand Executive Vice President Bryan Li. Glimcher Realty Trust took over management of the rest of the mall, which includes Pearlridge Uptown I and Pearlridge Downtown.

The former INspiration building on Moanalua Road, which was included in the purchase, has been leased to Hawaii Pacific Health, which operates the nearby Pali Momi Medical Center, Li said.